STATE AGENCY ACTION REPORT ON APPLICATION FOR CERTIFICATE OF NEED A. PROJECT IDENTIFICATION 1. Applicant/CON Action Number Sarasota Manatee Jewish Housing Council, Inc./CON #10031 1951 North Honore Avenue Sarasota, Florida 34235 Authorized Representative: Darlene Arbeit Executive Director (941) 377-0781 2. Service District/Subdistrict District 8, Subdistrict 8-6 (Sarasota County) B. PUBLIC HEARING No public hearing was held or requested on the proposed project to construct a new 12-bed skilled nursing facility (SNF) unit in the Anchin Pavilion at Kobernick-Anchin, through the delicensure of 12 beds at 107- bed Bay Village of Sarasota, Inc., Sarasota County, Florida. Letters of Support The Agency for Health Care Administration (AHCA or the Agency) received 298 letters of support. The Agency independently received 76 of these letters and the applicant submitted 222 (Letters of Support Volume 2). The letters are briefly described below. All or appreciably all of the 298 letters are of a single-page form letter variety and express great benefit to the Kobernick Anchin Retirement Community if the 12- bed skilled nursing facility project is approved, stating that a quality nursing home can be difficult to find, especially one nearby (near to the Anchin Pavilion at Kobernick-Anchin).
Letters of support received timely and independently by the Agency include Myron Ash, Esq. and architect, Phyllis Weitzner. Three letters are from medical doctors - Murray Friedman, M.D., Kenneth Hurwitz, M.D. and David Seitzman, M.D. Organizational support letters include the following: Merrill Oltchik, Endowment Fund Executive Director, Martin & Mildred Paver Religious School of Temple Beth Shalom; Sandy Cadman, President, Congregation for Humanistic Judaism and Nicci Kobritz, R.N., N.P., President, Youthful Aging Home Health. Letters of support submitted in the application (Letters of Support Volume 2) include four letters from physicians - Dr. Amy Ream, Dr. Sumner Kaufman, Dr. Howard Hermans and Dr. George Hafets. Organizational support letters include the following: Rabbi Brenner Glickman, Temple Emanu-El and Rose Chapman, President and CEO, Jewish Family Children s Service of Sarasota. In the applicant s Exhibit 1-1 (Letter from Bay Village of Sarasota), Kenneth Scheppele, Chairman, Board of Directors, Bay Village of Sarasota, Inc. supports this project. C. PROJECT SUMMARY Sarasota Manatee Jewish Housing Council, Inc. (CON #10031) (also referenced as SMJHC, Kobernick-Anchin or the applicant), a not-forprofit Florida corporation, proposes to renovate a floor of the Anchin Pavilion (an assisted living facility [ALF]) and establish a 12-bed skilled nursing facility (SNF) through the delicensure of 12 community nursing home beds at Bay Village of Sarasota, in District 8, Subdistrict 6, Sarasota County, Florida. Kobernick-Anchin is a retirement community comprised of 191 independent living units, called Kobernick House and the 109-bed Anchin-Pavillion ALF. There is no net change in the subdistrict s number of community nursing home beds as a result of this project. The applicant states the project will reduce the trauma and disruption experienced by residents and families, when Anchin Pavilion residents must be admitted to a skilled nursing facility. Advancing age can lead to chronic conditions and the project is designed to allow residents to age in place. The applicant states that its primary mission is the provision of retirement services to those of the Jewish faith. 2
The project involves 10,485 total gross square feet (GSF) of renovation (no new construction) with a renovation cost of $838,000. The total cost of the project is $1,937,891. Total project costs include the following: land, building and equipment costs; project development and start-up costs. The applicant proposes the following conditions: the address is 1951 North Honore Avenue and Medicaid at 16.7 percent of total patient days. D. REVIEW PROCEDURE The evaluation process is structured by the certificate of need review criteria found in Section 408.035, Florida Statutes. These criteria form the basis for the goals of the review process. The goals represent desirable outcomes to be attained by successful applicants who demonstrate an overall compliance with the criteria. Analysis of an applicant's capability to undertake the proposed project successfully is conducted by assessing the responses provided in the application, and independent information gathered by the reviewer. Applications are analyzed to identify strengths and weaknesses in each proposal. If more than one application is submitted for the same type of project in the same district (subdistrict), applications are comparatively reviewed to determine which applicant best meets the review criteria. Section 59C-1.010(3)(b), Florida Administrative Code, allows no application amendment information subsequent to the application being deemed complete. The burden of proof to entitlement of a certificate rests with the applicant. As such, the applicant is responsible for the representations in the application. This is attested to as part of the application in the Certification of the applicant. As part of the fact-finding, the consultant, Steve Love analyzed the application in its entirety with consultation from the Financial Analyst Supervisor, Ryan Fitch, who evaluated the financial data, and the Architect, Scott Waltz, who evaluated the architecturals and the schematic drawings as part of the application. 3
E. CONFORMITY OF PROJECT WITH REVIEW CRITERIA The following indicate the level of conformity of the proposed project with the criteria and application content requirements found in Florida Statutes, Sections 408.035, and 408.037; applicable rules of the State of Florida, Chapter 59C-1 and 59C-2 and Florida Administrative Code. 1. Fixed Need Pool a. Does the project proposed respond to need as published by a fixed need pool? Or does the project proposed seek beds or services in excess of the fixed need pool? Rule 59C-1.008(2), Florida Administrative Code. Pursuant to Florida Statutes 408.0435(1), the Florida Legislature extended a moratorium until July 1, 2011 on the issuance of any certificate of need (CON) for increases in the number of community nursing home beds around the state. Due to the moratorium, a fixed need pool was not published by the Agency and the number of community nursing home beds will remain constant statewide. The moratorium will allow the expansion of alternative and more costefficient programs. This project, if approved, will not change the bed count concerning the moratorium. b. If no Agency policy exists, the applicant will be responsible for demonstrating need through a needs assessment methodology, which must include, at a minimum, consideration of the following topics, except where they are inconsistent with the applicable statutory or rule criteria: Population demographics and dynamics; Availability, utilization and quality of like services in the district, subdistrict or both; Medical treatment trends; and Market conditions. Population demographics and dynamics There are 25 licensed community nursing facilities in District 8, Subdistrict 8-6, Sarasota County, with a total of 2,800 community nursing home beds. For the 12-month period ending December 31, 2007, the average occupancy rate for the subdistrict was 81.63 percent and 82.65 percent for District 8 overall. This indicates that on a subdistrict and district-wide basis, ample community nursing home bed supply exists. The table below illustrates the annual utilization for Bay 4
Village of Sarasota, Inc. Bay Village supports this project through planned delicensure of 12 community nursing home beds (Exhibit 1-1/Letter from Bay Village of Sarasota). CY 2007 Utilization Bay Village of Sarasota District 8 Subdistrict 6 (Sarasota County) Facility Bed Days Patient Days Total Occup. Medicaid Days Medicaid Occup. Bay Village of Sarasota 39,055 25,244 64.64% 0 0.00% Subdistrict 6 1,022,000 834,245 81.63% 448,421 53.75% District 8 2,544,050 2,102,562 82.65% 1,179,811 56.11% Source: AHCA publication Florida Nursing Home Utilization by District and Subdistrict January 2007-December 2007, issued 4/04/08. Of the 25 licensed community nursing home facilities in the subdistrict Bay Village of Sarasota was among the least occupied (the fifth least occupied [with 22 of the 25 facilities having greater occupancy]) in the subdistrict for the 12-month period ending December 31, 2007. With respect to the moratorium, the applicant seeks to transfer 12 of the 107 community nursing home beds at Bay Village of Sarasota to Kobernick- Anchin. The proposed location is to the north and slightly northeast of the current location of the 12 licensed beds proposed for relocation. This leaves Bay Village of Sarasota with 95 licensed beds remaining. As stated under section B above, Kenneth Scheppele, Chairman, Board of Directors, Bay Village of Sarasota, Inc. agrees to cooperate with the project by delicensing the applicable community nursing home beds, as stated above. Agency for Health Care Administration (AHCA) published population projections for District 8, Subdistrict 6, Sarasota County, indicate the following: Population Growth July 2008 to July 2013 District 8, Subdistrict 6 July 2008 Population July 2013 Population 5-Year Growth Age 65 & Over 75 & over 65 & over 75 & over 65 & over 75 & Over Sarasota County 122,907 68,059 141,695 74,487 15.29% 9.44% District Total 427,116 222,624 509,660 254,883 19.33% 14.49% Statewide Total 3,308,632 1,682,713 3,888,081 1,866,397 17.51% 10.92% Source: AHCA Population Estimates, published September 2007. The above table indicates by July 2013, Sarasota County s 65 years of age and older and 75 years of age and older population will have grown at a slower rate than the district overall and at a slower rate than the state overall. 5
The applicant provides a map (E.1., Need, page 1-5, Figure 1) to show that eight community nursing homes in Sarasota County are within a 10-minute drive time of the applicant s address. Using Claritas data (E.1., Need, page 1-6, Table 1-1/Population Estimates for 2007 and 2012 and Numbers of Elderly, Aged 65 Years and Older, Sarasota County by zip code), the applicant states the zip code of its project (34235) has a projected 2012 age 65 or older population of 5,836 that leads to a 15.8 percent growth rate for the period, compared to a Subdistrict 8-6 like growth rate of 16.7 percent and a like statewide growth rate of 16.1 percent. This indicates a slightly lower growth rate among the 65 years and older population than by the subdistrict or state. With the elderly population in the subject zip code expected to increase from 5,040 in 2007 to 5,836 by 2012, the applicant estimates a net increase of 796 elderly (age 65 or older) in the subject zip code (34235) by 2012. To protect relatively reasonable distribution and consumption of limited public resources within the widest practical parameters, the Agency considers population demographics and dynamics on a subdistrict basis and not on a zip code by zip code basis. However, this proposal relocates community nursing home beds within the same district and subdistrict and does not increase the net number of community nursing home beds. Availability, utilization and quality of like services The applicant indicates that the availability, utilization and quality of like services in the subdistrict are correlated. For CY 2007 Subdistrict 8-6 facilities reported 1,022,000 total bed days and 834,235 patient days or 81.63 percent total occupancy in 2,800 licensed community nursing home beds. Tarpon Pointe Nursing and Rehabilitation Center, the only nursing home located in the applicant s zip code (34235), is licensed for 120 beds and had 49.20 percent total occupancy (E.1., Need, page 1-8, Table 1-3/Utilization of Community Nursing Homes in Sarasota County by zip code calendar year 2007). The applicant correlates this relatively low occupancy rate with relatively low Agency quality ratings (STAR ratings) and states its residents will not go to Tarpon Pointe for SNF services (if SNF services are needed). Tarpon Pointe experienced the lowest possible STAR rating (a rating scale from one [lowest] to five [highest]) while the remaining SNFs in Subdistrict 8-6 averaged an overall STAR rating of three stars (E.1., Need, page 1-9, Table 1-4/Nursing Homes Aggregated by Zip Code and Corresponding STAR Ratings of Quality of Care in Sarasota County with 5 Stars Best). The applicant concludes that Tarpon Pointe has difficulties in overcoming a pattern of low occupancy associated with poor quality of care. The 6
applicant shows lower occupancy correlating with poor quality. The applicant contends that Tarpon Pointe s low occupancy and poor quality rating justify its proposal. Further, the applicant provides exhibits (Exhibit 1-2/Sarasota Magazine Award, Best of 2007, to the Anchin Pavilion and Exhibit 1-3/Herald- Trubune Sarasota Reader s Choice Award: Kobernick House: Category Best Retirement Community) that recognize the applicant for quality. Below is a map depicting the proposed site (planned to license 12 community nursing home beds) and Bay Village of Sarasota. The map roughly shows the geography of the area. Microsoft MapPoint 7
Below is a map that depicts the 12 zip code area where nursing home beds are currently licensed in Subdistrict 8-6 (Sarasota County). It is noted that the applicant states its primary mission is to serve those of the Jewish faith and the applicant anticipates the project will serve Kobernick-Anchin residents. Microsoft MapPoint Legend by Zip Code: Bolded zip codes account for the location of one or more SNFs in Sarasota County (Subdistrict 8-6). 8
The proposed zip code (34235) for the project is the Northeastern-most of those bolded in the prior map. As previously stated, the facility within the applicant s subject zip code (34235) has a one-star inspection rating, according to Agency records in the Nursing Home Guide 1, as of an online internet run date of July 17, 2008 2. The applicant provides a record of the rating at Tarpon Pointe Nursing and Rehabilitation Center (Tab 10 Additional Information). The applicant states that its ALF patients will not seek services at Tarpon Pointe and that approval would allow existing and future Kobernick-Anchin residents the opportunity to age in place, should they need SNF services. The applicant provides a table (E.1., Need, page 1-12, Table 1-5/Nursing Homes Days, Elderly Population, Average Daily Census and Occupancy for Calendar Year 2007 in Sarasota County) to show that Tarpon Pointe the sole SNF in zip code 34235, had the second lowest average daily census (ADC) in Subdistrict 8-6, for CY 2007. The ADC was 59, leading to the total average occupancy rate of 49.2 percent. The applicant estimates an ADC at its proposed SNF of 11 (E.1., Need, page 1-14). To protect relatively reasonable distribution and consumption of limited public resources within the widest practical parameters, the Agency, historically and now, considers market conditions on a subdistrict basis and not on a zip code by zip code basis. However, this proposal relocates community nursing home beds within the same district and subdistrict and does not increase the net number of community nursing home beds. 2. Agency Rule Preferences Does the project respond to preferences stated in Agency rules? Please indicate how each applicable preference for the type of service proposed is met. Chapter 59C-1.031-.044, Florida Administrative Code. Chapter 59C-1.036 of the Florida Administrative Code does not contain preferences relative to community nursing home beds nor does the Agency for Health Care Administration (AHCA or the Agency) publish specific preferences for these facilities. However, the rule does contain standards the Agency utilizes in assessing the applicant s ability to provide quality care to the residents. 1 http://ahcaxnet.fdhc.state.fl.us/nhcguide/viewfacilitydata.aspx?region=08 9
a. Geographically Underserved Areas. In a competetitive certificate of need review within the nursing home subdistrict as defined in 59C-2.200, Florida Administrative Code, the agency shall award a certificate of need if the applicant meets all applicable criteria for a geographically undeserved area as specified in subsection 408.032(18), Florida Statutes (Florida Statutes), and if the applicant meets the applicable statutory certificate of need review criteria specified in section 408.035, Florida Statutes, including bed need according to the relevant bed need formula contained in this rule. If the applicant is awarded a certificate of need based on the provisions of this paragraph, the applicant shall agree that the nursing facility will be located in a county without a nursing facility, or in the center of an area within the subdistrict of a radius of at least 20 miles which meets the definition of a geographically undeserved area. The center of the geographically undeserved area shall be the proposed nursing home location in the application. The application is not submitted in order to remedy a geographically underserved area as described by rule and statutes. This project is to construct a new 12-bed SNF through delicensing 12 community nursing home beds from Bay Village of Sarasota. This latter facility is within the same district and subdistrict as the applicant s proposed site. b. Proposed Services. Applicants proposing the establishment of Medicare-certified nursing facility beds to be licensed under Chapter 400, Florida Statutes, shall provide a detailed description of the services to be provided, staffing pattern, patient characteristics, expected average length of stay, ancillary services, patient assessment tools, admission policies, and discharged policies. SMJHC states the proposed 12 community nursing home beds will be Medicare and Medicaid certified. According to the applicant, it will provide a full range of nursing, rehabilitative and restorative care. SMJHC indicates a multidisciplinary team reviews weekly the patient s progress toward meeting therapeutic goals. Nursing services are to include: sub acute medical services; post-hospital care; short-term rehabilitation services and long-term care designed to meet physical, mental and medical needs. These 10
programs are stated to involve physicians, therapists, skilled nursing practitioners and other health professionals. Since return to home is anticipated to be return to one of the community s residences, follow-up and aftercare are to be controlled and overseen without interruption. The applicant s notes to Schedule 6A state the project is expected to add a nursing home administrator along with a part-time MDS nursing coordinator. The applicant s proposed change to the existing staffing pattern is illustrated in the table below. Sarasota Manatee Jewish Housing Council, Inc./CON #10031 Staffing Patterns Year 1 and Year 2 of Operation Year 1 FTEs Year 1 Ending 12/31/10 Year 2 FTEs Year 2 Ending 12/31/11 ADMINISTRATION Administrator 1.0 1.0 MDS RN 0.5 0.5 TOTAL 1.5 1.5 Source: CON Application #10031 Financial Schedule 6A. All other staff, such as administration, physicians, nursing, ancillary, dietary social services, housekeeping, laundry and plant maintenance do not change. Chapter 400.23, Florida Statutes, currently requires a minimum licensed nurse staffing of 1.0 hours of direct care for each resident per day and a minimum certified nurse assistant staffing of 2.9 hours of direct care for each resident per day. The calculations below are based on the applicant s proposed staffing from Schedule 6A and projected occupancy from Schedule 5 of the application. Sarasota Manatee Jewish Housing Council, Inc Minimum Staffing Requirements FTE Nurses/Aides Minimum Requirement 1 st Year 2010 2 nd Year 2011 Nurses 1.0 hours of direct care per resident 4.15 3.80 Aides 2.9 hours of direct care per resident 5.84 5.36 Sources: Extracted from Schedule 5 & 6 of CON Application #10031. As shown in the above table, the applicant s projected staffing patterns exceed the minimum requirements outlined in Section 400.23 (3)(a), Florida Statutes. In addition, licensed nursing staff 11
must be at least one per 40 residents and a minimum of one nurse aide for each 20 residents. The applicant s projections are in compliance with these requirements. The FTE projection from year one to year two increases by 1.5 FTEs. A full-time (1.0 FTE) administrator is introduced and a parttime (0.5 FTE) MDS RN is included. There is no other change, such that the total FTE count goes from 63.0 to 64.5. Please see Section 3.c. Staffing, for greater detail regarding FTE staffing information. c. Quality of Care. In assessing the applicant s ability to provide quality of care pursuant to s. 408.035(1), Florida Statutes, the Agency shall evaluate the following facts and circumstances: 1. Whether the applicant has had a Chapter 400, Florida Statutes, nursing facility license denied, revoked, or suspended within the 36 months prior to the application. The applicant does not currently hold SNF licensure and does not provide SNF services. SMJHC states it has not had a nursing facility license denied, revoked, or suspended. 2. Whether the applicant has had a nursing facility placed into receivership at any time during the period of ownership, management, or leasing of a nursing facility in the 36 months prior to the current application. The applicant does not currently hold SNF licensure and does not provide SNF services (the purpose of the project is to acquire such licensure). SMJHC states it has not had a nursing facility placed into receivership at any time. 3. The extent to which the conditions identified within subparagraphs 1 and 2 threatened or resulted in direct, significant harm to the health, safety, or welfare of the nursing facility residents. This provision is not applicable. 12
4. The extent to which the conditions identified within subparagraph 3 were corrected within the time frames allowed by the appropriate state agency in each respective state and in a manner satisfactory to the Agency. This provision is not applicable. (4) (f) Harmful Conditions. The Agency shall question the ability of the applicant to provide quality of care within any nursing facility when the conditions identified in subparagraph (e) 1 and (e) 2 result in the direct, significant harm to the health, safety, or welfare of a nursing facility resident, and were not corrected within the time frames allowed by the appropriate state agency in each respective state and in a manner satisfactory with the agency. This provision does not apply to the applicant. (5) Utilization Reports. Within 45 days after the end of each calendar quarter, facilities with nursing facility beds licensed under Chapter 400, Florida Statutes shall report to the Agency, or its designee, the total number of patient days, which occurred in each month of the quarter, and the number of such days that were Medicaid patient days. SMJHC states it will provide the required utilization data to AHCA and the local health council. 3. Statutory Review Criteria a. Is need for the project evidenced by the availability, quality of care, accessibility and extent of utilization of existing health care facilities and health services in the applicant's service area? ss. 408.035 (1), (2) and (5), Florida Statutes. Subdistrict 8-6 (Sarasota County) total nursing home bed occupancy for the 12-month period ending December 31, 2007 was 81.63 percent and the applicant concedes that beds are available for occupancy. Total occupancy within the applicant s 34235 zip code, for the same period, was 49.2 percent. The applicant contends that Tarpon Pointe Nursing and Rehabilitation Center s low occupancy is due to poor quality. The applicant also states that quality on a subdistrict-wide basis is evidenced (E.3., Health Planning, page #3-2, Table 3-1/STAR Rating of Community Nursing Homes in Sarasota County Most Recent Data Available, March 13
2008) by the overall three-star average rating of facilities in the subdistrict (one being the lowest possible and five being the highest). The applicant provides the ratings for each of the 25 community nursing homes in the subdistrict as of March 2008 (Tab 10 Additional Information). The applicant states that transition to nursing home care for its residents is difficult at least in part due to the quality of existing SNFs within the subdistrict and that approval of the project would make the transition more seamless, as Kobernick-Anchin is already a provider of independent living units and ALF services. The factors driving this application include population growth on a zip code basis (pursuant to Claritas), continued demand for nursing home care and future demand for nursing home care that will allegedly be better accommodated by project approval. Agency for Health Care Administration (AHCA) published population projections for District 8, Subdistrict 6, Sarasota County, indicate the following: Population Growth July 2008 to July 2013 District 8, Subdistrict 6 July 2008 Population July 2013 Population 5-Year Growth Age 65 & Over 75 & over 65 & over 75 & over 65 & over 75 & Over Sarasota County 122,907 68,059 141,695 74,487 15.29% 9.44% District Total 427,116 222,624 509,660 254,883 19.33% 14.49% Statewide Total 3,308,632 1,682,713 3,888,081 1,866,397 17.51% 10.92% Source: AHCA Population Estimates, published September 2007. The above table indicates by July 2013, Sarasota County s 65 years of age and older and 75 years of age and older population will have grown at a slower rate than the district overall and at a slower rate than the state overall. The number of 65 years of age and older residents in Sarasota County by July 2013 is estimated to grow by 18,877 persons and for 75 years of age older, growth is estimated to be by 6,428 persons. According to the applicant, the demand for nursing home care in Sarasota County will continue to grow and to relocate 12 community nursing home beds (as proposed) is preferable to removing these beds from inventory (a result of delicensing 12 community nursing home beds at Bay Village of Sarasota and not relocating them). The applicant indicates its facility is in Northeast Sarasota County and is reasonably accessible (geographically) to residents and points of interest. SMJHC attests that due to lower than 94 percent (full occupancy) 14
calculation, applicable beds appear to be ample and accessible; however, it is stated that mediocre to poor quality ratings, on a subdistrict-wide basis, contribute heavily to a lack of availability and access to quality operations. The applicant elects to respond to additional criteria - the Health Care Access Criteria, as stated in Chapter 59C-1.030(2). Below are the applicant s volunteered responses. (a) The need that the population served or to be served has for the health or hospice services proposed to be offered or changed, and the extent to which all residents of the district, and in particular low income persons, racial and ethnic minorities, women, handicapped persons, other underserved groups and the elderly are likely to have access to those services. The applicant states that the 12-bed community nursing home facility proposed is the transfer of 12 beds from Bay Village of Sarasota, Inc., a continuing care retirement community that the applicant states does not participate in the Medicaid Program. The applicant states all its SNF beds will be Medicare and Medicaid certified, enhancing access to lower income persons. (b) The extent to which that need will be met adequately under a proposed reduction, elimination or relocation of a service, under a proposed substantial change in admissions policies or practices, or by alternative arrangements, and the effect of the proposed change on the ability of members of medically underserved groups which have traditionally experienced difficulties in obtaining equal access to health services to obtain needed health care. The applicant projects that holding use rates constant, by 2012, bed demand will create a 95 percent occupancy rate and that relocation of beds (as proposed) is preferable to deleting them from inventory. (c) The contribution of the proposed service in meeting the health needs of members of such medically underserved groups, particularly those needs identified in the applicable local health plan and state health plan as deserving of priority. The applicant affirms that local health plans are no longer published and the Agency confirms that such plans are no longer a part of CON review. 15
(d) In determining the extent to which a proposed service will be accessible, the following will be considered: 1. The extent to which medically underserved individuals currently use the applicant s services, as a proportion of the medically underserved population in the applicant s proposed service area(s), and the extent to which medically underserved individuals are expected to use the proposed services, if approved; As the applicant provides retirement options, it states medically underserved residents of its current operations are served through a variety of Jewish Benevolent Assistance Programs, some of which the applicant states are funded through the Jewish Housing Council Foundation (the Foundation). Per the applicant, the Foundation, each year, contributes $400,000 so that residents who have exhausted their funds may remain at the applicant s facility. The applicant also agrees to have its SNF Medicare and Medicaid certified. 2. The performance of the applicant in meeting any applicable Federal regulations requiring uncompensated care, extent to which medically underserved individuals currently use the applicant s services, as a proportion of the medically underserved population in the applicant s proposed service area(s), and the extent to which medically underserved individuals are expected to use the proposed services, if approved; SMJHC identifies itself as a not-for-profit corporation, with a mission to serve the minority Jewish population and not discriminate with respect to race, religion, gender, age or handicap. 3. The extent to which Medicare/Medicaid and medically indigent patients are served by the applicant; and The applicant references Schedule 7 and provides a table (E.3., Health Planning, page #3-9, Table 3-3/Patient Days by Payer for First Two Years in Skilled Unit). The table indicates 669 Medicaid patient days in year one and 700 Medicaid patient days in year two. The applicant proposes 16
to condition CON approval to 16.7 percent of the 12-bed facility s total annual patient days being provided to Medicaid. It further anticipates 1,673 self-pay patient days in year one and 1,750 self-pay patient days in year two. 4. The extent to which the applicant offers a range of means by which a person will have access to its services. The applicant again references the Foundation as a revenue source and states that fundraising is a means to address those patients that have exhausted their financial means. b. Does the applicant have a history of providing quality of care? Has the applicant demonstrated the ability of providing quality care? Is the applicant a Gold Seal Program nursing facility that is proposing to add beds to an existing nursing home? ss. 408.035(3) and 408.035(10), Florida Statutes. The applicant is a not-for-profit Florida corporation and not currently a SNF provider. Kobernick-Anchin is a retirement community of independent living units and an ALF (Anchin Pavilion). As it is not a current SNF provider, it is not eligible for Gold Seal. Additionally, SMJHC does not indicate that it owns or operates any Gold Seal facilities in Florida. The applicant contends that it will provide quality care. SMJHC states it will use methods available to ensure high quality is consistently provided, highlighting the Florida Health Care Association s (FHCA) Quality Credentialing Initiative and also the Evercare Program (Evercare). The FHCA s credentialing process includes an internal and external review process of quality issues, which the applicant discusses (E.3., Quality of Care, pages 4-10 to 4-13). The applicant also discusses the Evercare Team and its functions. SMJHC offers 13 policies and procedures to address quality (E.3., Quality of Care, pages 4-14 and 15). The 13 policies are provided for Agency review (Exhibit 4-1/Sample Operating Policy Areas). 17
c. What resources, including health manpower, management personnel and funds for capital and operating expenditures, are available for project accomplishment and operation? ss. 408.035(4), Florida Statutes. The applicant is a not-for-profit Florida corporation. The financial impact of the project will include the project cost of $1,937,891 and incremental year two operating costs of $1,317,100. The audited financial statements of the application for the periods ending June 30, 2006 and 2007 were analyzed for the purpose of evaluating the applicant s ability to provide the capital and operational funding necessary to implement the project. Short-Term Position: The applicant s current ratio of 0.9 indicates current assets are not sufficient to cover current obligations; this is well below average and results in negative working capital of $81,916, a weak position. The ratio of cash flow to current liabilities of 0.5 is also below average and a weak position. Overall the applicant has a weak short-term position. (See Table below). Long-Term Position: The applicant s long-term debt to net asset ratio of a negative 2.8 indicates the applicant s liabilities exceed assets. This is a weak position and may impair the applicant s ability to acquire future long-term debt at reasonable rates. The most recent year had an operating loss of $566,619, which resulted in an operating margin of a negative 5.1 percent. Overall, the applicant has a weak long-term position. (See Table below). Capital Requirements: Schedule 2 listed capital projects totaling $1.99 million which consists of the project and $50,000 for capital expenditures. The applicant did not include current maturities of long-term debt which would be due prior to operation of the skilled nursing facility. The audit lists $970,000 in longterm debt due prior to the first year of operations. It should be noted that the applicant refinanced a portion of its debt after the audit date so the amount of debt due prior to operation may have been reduced. Available Capital: Funding for this project would come from a bank loan in the amount of $1.0 million with the remainder coming from restricted funds. The applicant provided a copy of a letter of interest dated June 11, 2008, from LandMark Bank. Typically, the Agency would not consider a letter 18
of interest a firm commitment to lend. In this case, the letter indicates that a consensus has been reached on the loan structure, rate and terms, and that LandMark Bank does not anticipate any difficulties in providing financing as needed for the project. This language provides support that it is more likely than not that the loan will be executed; however, it is still not considered a firm commitment to lend. Of the applicant s $4.5 million in restricted assets, $630,342 is available for capital expenditures and board-designated uses. The remaining restricted assets are held to fund debt interest and principal. The applicant s debt refinancing that occurred after the audit date may have resulted in a reduction of the restricted assets earmarked for debt reserves, but the amount if any cannot be determined. Based on the 2007 audit, it is not clear that the applicant has the funds available for this project. Staffing: Schedule 6A indicates, by December 31, 2010 (the first year of the proposed project), the applicant forecasts 64.5 FTEs as follows: administrator/assistant administrator, director of nursing and other [ALF administrator] (1.0 FTEs each); other [MDS RN] (0.5 FTEs); registered nurses [RNs] (0.0 FTEs); licensed practical nurses [LPNs] (8.3 FTEs); nurse s aides (11.7 FTEs); dietary supervisor (1.0 FTEs); cooks (1.9 FTEs); dietary aides (3.1 FTEs); other [Resident Assistants] (10.8 FTEs); activity director (1.0 FTEs); activities assistant (2.5 FTEs); housekeeping supervisor (1.0 FTEs); housekeepers (6.1 FTEs); laundry aides (1.6 FTEs); maintenance supervisor (1.0 FTEs); maintenance assistance (2.0 FTEs) and other [security staff] (8.0 FTEs). The total FTE count is 64.5 FTEs with an incremental increase of only 1.5 FTEs from the applicant s existing operations (adding an administrator at 1.0 FTEs and an MDS RN at 0.5 FTEs). This 64.5 FTE count is for both year one and year two. The FTEs remain the same in all categories in both years. Neither the schedule nor accompanying notes discuss, contractual or otherwise, the following: a medical director; physicians, RNs (except for the part-time MDS RN) or any ancillary FTEs. The applicant provides a discussion of key personnel which includes two RN staff members, Adine D. Kaufman, Administrator of the ALF who is stated to oversee outpatient rehabilitation and home health services and Estrella R. Flores, Director of Nursing for the ALF. Ms. Flores background as a staff nurse in the ALF as Director of Nursing is cited as an asset to provide the experience to implement the skilled nursing unit. The applicant states that a licensed nursing home administrator and a part-time MDS nursing coordinator will be recruited. All other FTE staff are already stated to be in place. The applicant provides a brief discussion of the organization s recruitment and retention policies. 19
Conclusion: Funding for this project is in question. (CON #10031) Sarasota-Manatee Jewish Housing Council, Inc. 6/30/2007 6/30/2006 Current Assets $1,382,812 $1,258,764 Cash and Current Investment $582,427 $861,997 Assets Whose use is Limited $4,490,376 $3,265,003 Total Assets $25,388,173 $25,895,893 Current Liabilities $1,464,728 $1,076,924 Total Liabilities $38,435,930 $38,716,557 Net Assets ($13,047,757) ($12,820,664) Total Revenues $11,150,318 $10,706,237 Interest Expense $2,183,815 $1,867,742 Excess of Revenues Over Expenses ($566,619) ($569,048) Cash Flow from Operations $783,040 $1,398,101 Working Capital ($81,916) $181,840 FINANCIAL RATIOS 6/30/2007 6/30/2006 Current Ratio (CA/CL) 0.9 1.2 Cash Flow to Current Liabilities (CFO/CL) 0.5 1.3 Long-Term Debt to Net Assets (TL-CL/NA) -2.8-2.9 Times Interest Earned (NPO+Int/Int) 0.7 0.7 Net Assets to Total Assets (TE/TA) -51.4% -49.5% Operating Margin (ER/TR) -5.1% -5.3% Return on Assets (ER/TA) -2.2% -2.2% Operating Cash Flow to Assets (CFO/TA) 3.1% 5.4% d. What is the immediate and long-term financial feasibility of the proposal? ss. 408.035(6), Florida Statutes. A comparison of the applicant s estimates to the control group values provides for an objective evaluation of financial feasibility, (the likelihood that the services can be provided under the parameters and conditions contained in Schedules 7 and 8), and efficiency, (the degree of economies achievable through the skill and management of the applicant). In general, projections that approximate the median are the most desirable, and balance the opposing forces of feasibility and efficiency. In other words, as estimates approach the highest in the group, it is more likely that the project is feasible, because fewer economies must be realized to achieve the desired outcome. Conversely, as estimates approach the 20
lowest in the group, it is less likely that the project is feasible, because a much higher level of economies must be realized to achieve the desired outcome. These relationships hold true for a constant intensity of service through the relevant range of outcomes. As these relationships go beyond the relevant range of outcomes, revenues and expenses may, either go beyond what the market will tolerate, or may decrease to levels where activities are no longer sustainable. Comparative data was derived from skilled nursing facilities that submitted Medicaid cost reports in fiscal year 2006 and 2007. The Agency selected six skilled nursing facilities with low Medicaid utilization to approximate the applicant s projected Medicaid days. Per diem rates are projected to increase by an average of 3.4 percent per year through December 2011. The price adjustment factor used was based on the new CMS Market Basket Price Index as published in the 1st Quarter 2008 Health Care Cost Review. Projected net revenue per patient day (NRPD) of $314 in year one and $323 in year two is between the control group median and lowest values of $327 and $216 in year one and $336 and $222 in year two. With net revenues between the median and lowest values in the control group, the facility is expected to consume health care resources in proportion to the services provided. (See Table below). Anticipated costs per patient day (CPD) of $308 in year one and $314 in year two is between the control group median and the highest values of $305 and $518 in year one and $313 and $532 in year two. With CPD approximating the group median value, costs appear reasonable. (See Table below). The year two operating profit for the skilled nursing facility of $1,317,100 computes to an operating margin per patient day of $10 which is between the control group median and lowest value of $34 and a negative $29. Conclusion: Assuming the applicant is able to acquire the financing needed for construction and working capital, this project appears to be financially feasible. 21
CON #10031 Dec-11 YEAR 2 VALUES ADJUSTED SELECT FY 2006 YEAR 2 ACTIVITY FOR INFLATION PER PAT. COST REPORT DATA ACTIVITY DAY Highest Median Lowest ROUTINE SERVICES 1,344,600 320 243 230 181 ANCILLARY SERVICES 318,800 76 188 77 32 OTHER OPERATING REVENUE 115,600 28 437 2-1 GROSS REVENUE 1,779,000 423 720 372 249 DEDUCTIONS FROM REVENUE 420,600 100 0 0 0 NET REVENUES 1,358,400 323 598 336 222 EXPENSES ADMINISTRATIVE 349,900 83 155 79 46 ANCILLARY 212,900 51 74 46 18 PATIENT CARE 615,300 146 204 140 120 PROPERTY 139,000 33 104 23 14 OTHER 0 0 40 4 3 TOTAL EXPENSES 1,317,100 314 532 313 204 OPERATING INCOME 41,300 10 59 34-29 3.0% PATIENT DAYS 4,201 VALUES NOT ADJUSTED TOTAL BED DAYS AVAILABLE 4,380 FOR INFLATION TOTAL NUMBER OF BEDS 12 Highest Median Lowest PERCENT OCCUPANCY 95.91% 93.6% 91.8% 87.5% PAYER TYPE PATIENT DAYS % TOTAL SELF PAY 1,750 41.7% MEDICAID 700 16.7% 33.1% 29.2% 24.0% MEDICARE 1,401 33.3% 53.7% 26.7% 7.2% INSURANCE 0 0.0% HMO/PPO 350 8.3% OTHER 0 0.0% TOTAL 4,201 100.0% e. Will the proposed project foster competition to promote quality and cost-effectiveness? ss. 408.035(7), Florida Statutes. Competition to promote quality and cost-effectiveness is driven primarily by the best combination of high quality and fair price. Competition forces health care facilities to increase quality and reduce charges/costs 22
in order to remain viable in the market. The health care industry has several factors that limit the impact competition has on promoting quality and cost-effectiveness. These factors include a disconnect between the payer and the end user of health care services, and a lack of consumer friendly quality measures and information. These factors make it difficult to measure the impact this project will have on competition to promote quality and cost-effectiveness. However, the Agency can measure the potential for competition to exist in a couple of areas. Provider-Based Competition: This application is for a transfer of 12 skilled nursing facility beds in District 8. Considering this project is not adding beds to the district and the bed transfer is relatively small, this project is not likely to have a material impact on provider-based competition. Price-Based Competition: The impact of the price of services on consumer choice is limited to the payer type. The impact of price-based competition would be limited to payers that negotiate price for services, namely managed care organizations and increasingly individual health care consumers. Therefore, price competition is limited to the share of patient days that are under managed care plans and self-pay patients. The applicant is projecting 50 percent of its patient days from managed care and self-pay payers. Therefore, the potential for price-based competition exists among 50 percent of the applicant s projected patient days. Conclusion: This project is not likely to have a material impact on provider-based competition; however, the potential for price-based competition exists for 50 percent of the applicant s projected patient days. f. Are the proposed costs and methods of construction reasonable? Do they comply with statutory and rule requirements? ss. 408.035(8), Florida Statutes; Ch. 59A-4, Florida Administrative Code. All beds will be located in private rooms with attached private toilet/ shower rooms. The new resident rooms exceed the minimum size and amenity requirements. The construction type is listed as National Fire Protection Association (NFPA) Type I (332) and the entire building is fully sprinklered in accordance NFPA 13. The floor housing the new beds has been subdivided into smoke compartments as required for all I-2 occupancies. 23
The floor immediately below the skilled nursing unit was not provided, but this floor will also need to be divided into smoke compartments. All required functional space have been provided and are adequately sized and located. Plans should be revised to provide access to the Soiled Utility room without passing through janitor s closet. Also it appears that the equipment storage room and mechanical rooms are too small to serve their intended functions. The project summary on the plan indicates compliance with current codes. Some additional architectural, mechanical and electrical physical plant standards will need to be addressed in greater detail as the project is developed, but the physical constraints of the spaces should accommodate these requirements. The resident rooms are generously sized and the facility should be able to meet or exceed all code requirements. Based on the analysis of actual cost data of a similar project, the estimated construction costs appear to be within the expected range. The information provided in the project completion forecast appears to be reasonable. The architectural review of the application shall not be construed as an in-depth effort to determine complete compliance with all applicable codes and standards. The final responsibility for facility compliance ultimately rests with the owner. g. Does the applicant have a history of and propose the provision of health services to Medicaid patients and the medically indigent? ss. 408.035(9), Florida Statutes. The applicant states that philanthropic efforts through the Jewish Housing Council Foundation provide each year, $480,000 to help off-set the cost of care for those living at Kobernick-Anchin who have exhausted their resources. The following table compares annual occupancy rates for Bay Village of Sarasota in Subdistrict 6 (Sarasota County), District 8 and the state, during the period January 2007 through December 2007, along with its Medicaid population percentage for the same period. 24
January 2007 December 2007 Occupancy Rates Total Medicaid Bay Village of Sarasota 64.64% 0.00% Subdistrict 6 81.63% 53.75% District 8 82.65% 56.11% State 88.05% 60.62% Source: AHCA publication Florida Nursing Home Utilization by District and Subdistrict January 2007-December 2007, issued 4/04/08. The applicant proposes to condition the project s approval to the provision of 16.7 percent of the 12-bed facility s total annual patient days to Medicaid patients. Schedule 7 indicates that Medicaid will account for 16.66 percent (700/4,201) of the project s year two patient days. F. SUMMARY Sarasota Manatee Jewish Housing Council, Inc. (CON #10031), also known as Kobernick Anchin, is a retirement community of 191 independent living units (Kobernick House) and 109-bed assisted living facility named Anchin Pavilion (AP). The applicant proposes to establish a 12-bed community nursing home skilled nursing facility through the delicensure of 12 like beds from 107-bed Bay Village of Sarasota, Inc. (which is located in the same district and subdistrict). The project involves 10,485 total gross square feet (GSF) of renovation (no new construction) with a renovation cost of $838,000. The total cost of the project is $1,937,891. Total project costs include the following: land, building and equipment costs; project development and start-up costs. Per Schedule C, the applicant proposes the following conditions: the facility address at 1951 North Honore Avenue and 16.7 percent of the 12-bed facility s total patient days will be provided to Medicaid patients. Need: Need analysis includes evidence that the skilled nursing facility relinquishing community nursing home beds to make this project a reality (12 beds at the 107-bed Bay Village of Sarasota) is among the least occupied in the entire subdistrict. Bay Village was the fifth least occupied of the 25 community nursing homes in Sarasota County in CY 2007. 25
The applicant contends that poor quality ratings and low occupancy at Tarpon Pointe Nursing and Rehabilitation Center, the nearest SNF to the proposed applicant, supports need for the project. The applicant indicates that its residents will not go to Tarpon Pointe. Given expected population increases, particularly considering the elderly population in Sarasota County, the applicant predicts that if these 12 beds are delicensed and not relocated to maintain the current inventory, the county s skilled nursing population is likely to experience access issues in the future. However, the applicant indicates this project is essentially to serve Kobernick-Anchin residents. Quality of Care: The applicant demonstrated the ability to provide quality care. The applicant provides a description of its plan to assure quality care for its patients and community recognition of its quality accomplishments. Availability of Funds/Financial Feasibility: The applicant has a weak short-term position and a weak long-term position. A letter of commitment from LandMark Bank is not considered by the Agency to be a firm letter of commitment to lend and based on the applicant s 2007 audit, it is not clear the applicant has the funds available for this project which places funding for the proposal in question. Assuming the applicant is able to acquire the financing needed for construction (renovation) and working capital, the project appears to be financially feasible. The project is not likely to have a material impact on provider-based competition but the potential for price-based competition exists for 50 percent of the applicant s projected patient days. 26